France is preparing chip industry bail out, says report

LONDON  The French government is drawing up plans to support the semiconductor industry there, according to an AFP report that cited a senior government official as its source.

"We are working on measures for the sector," AFP quoted Luc Chatel, secretary of state for industry saying to the French parliament. Chatel also told the parliament that a "huge" injection of state aid could be justified as semiconductors are of strategic interest to France.

"In microchips, if we don't do something, the whole lot will disappear to Asia," AFP also quoted Chatel as saying. However, details of the size of any support package were not given.

The chip market is currently running at about 30 percent below where it was one year ago and this is expected to result in contracting market in 2009 and could result in a number of mergers and even bankruptcies as companies struggle with the market conditions.

France has relatively little semiconductor manufacturing although it has created a number of successful fabless chip companies. France does host part of STMicroelectronics NV, officially a Dutch corporation headquartered in Geneva but in practice a global chip company with French and Italian origins. STMicroelectronics operates an R&D and pilot wafer fab complex at Crolles near Grenoble.
That facility serves as a major focus of a nanoelectronics cluster around Grenoble that would be set back if ST decided to close the Crolles operation.

Back in January The European Commission opted not to raise any objections under state aid rules to a financial support package of 457 million euros (about $600 million) being granted by France to the Nano2012 R&D program.